Bank of India Q1 net up 8.6% at Rs 964 crore
Mumbai: Bank of India Friday reported a modest 8 percent rise in the June quarter profit at Rs 964 crore, driven by a healthy rise in both interest and non-interest income components, despite increased asset quality woes.
"Net profit growth has to be seen in the context of the overall economic conditions, where there has been a slowdown in growth," bank Chairperson and Managing Director Vijayalakshmi Iyer told reporters here.
Net interest income grew 24.15 percent to Rs 2,044 crore during the quarter, while the non-interest income went up 40 percent to Rs 1,181 crore on the back of treasury gains.
Gross non-performing assets (NPAs) ratio increased to 3.04 percent from 2.56 percent in the comparable period, driven down by fresh slippages of nearly Rs 1,900 crore during the quarter.
Iyer, however, said the slippages are still below the peak of around Rs 2,000 crore the bank witnessed throughout the past fiscal and added it is targeting to bring down gross NPA numbers to 2.90 percent.
A majority of the slippages came from the textiles, steel and metals sector, she added.
During the quarter, the bank restructured Rs 755 crore of assets and Iyer said it has a pipeline of up to Rs 1,000 crore for restructuring in the second quarter.
Its total provisions nearly doubled to Rs 694.56 crore from Rs 472.23 crore.
The bank, which cut its lending rates on a finance ministry diktat earlier this month, was able to expand its domestic net interest margin to 3.07 percent from the 2.56 percent year ago, even though the share of the low-cost current and saving account deposits fell marginally.
Iyer, however, said the incremental lending and some reduction in the cost of funds will help it expand the domestic margins to 3.15 percent for the fiscal.
She said the bank is not affected much on the liquidity and the costs front as a result of the recent RBI moves to tighten liquidity, conceding that treasury operations can face some pressure going forward if the measures continue for long.
The bank's capital adequacy stood at 10.66 percent, with the core tier-I capital at 7.98 percent. Iyer said the bank requires a total capital of Rs 6,200 crore during the fiscal, excluding the ploughback of profits.
"We will be raising Rs 2,000 crore through a mix of QIP or bonds and we will be applying to the government for it," she said.
The bank scrip tanked 4.55 percent to Rs 183.50 on the BSE, whose 30-share benchmark Sensex ended the session with 0.29 percent losses.